Philly Fed manufacturing index cools off in May

The numbers: The Philadelphia Fed’s business activity index fell to 31.5 in May from a nearly fifty-year high of 50.2 in the prior month.

Economists polled by the Wall Street Journal expected a 40.5 reading. Any reading above zero indicates expansion in the manufacturing sector.

What happened: The details of the report were stronger than the headline index.

The barometer on new orders increased 3.5 points to 36. The shipments index rose 4.3 points to 25.3.

The measure on six-month business outlook rose 13 points to 66.6m while the index of the number of employees rose 11.5 points to 30.8.

The prices paid index fell 7.7 points to 69.1 n May. The prices-received index fell 6.5 points to 34.5.

Big picture: Despite the decline, the index is still conveying solid growth, economists said. Earlier this week, a similar survey conducted by the New York Fed inched down to 24.8 from 26.3 in April. Economists use the New York and Philadelphia regional indexes to gauge the strength of the national ISM manufacturing index, which slipped to a reading of 60.7 in April due in part to supply-chain bottlenecks.

Market reaction: Stocks


were set to open lower Thursday after stocks lost ground Wednesday, extending a recent slide on rising inflation fears.

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